Is Your CEO Out of Touch or Being Misled?

In January, The Economist revealed the results of a major study aimed at identifying how businesses that are successful at being data-driven differ from those that are not.

In January, The Economist revealed the results of a major study aimed at identifying how businesses that are successful at being data-driven differ from those that are not.

Some of the findings are quite expected, and there are a few surprises. For the most part, data-driven organizations seem to be doing a lot of the very things you’d expect: providing wide access to data, supporting the use of data for decision making, support from the top, etc. The infographic below summarizes what has been termed “the virtuous circle of data,” which is the path to successfully becoming a data-driven organization. Visit the study’s website to read the full report, watch a webinar, and more.

A Troubling Result

One specific result I’d like to delve into is the fact that CEOs have a much rosier picture of how data-driven their organizations are than do those down the chain. A few of the key statistics are:

While 47 percent of CEOs believe that all employees have access to the data they need, only 27 percent of all respondents agree that they do.

Similarly, 43 percent of CEOs think relevant data are captured and made available in real time, compared to 29 percent of all respondents.

CEOs are also more likely to think that employees extract relevant insights from data – 38 percent of them hold this belief, as compared to 24 percent of all respondents and only 19 percent of senior vice presidents, vice presidents and directors.

This set of findings seems to have struck a nerve. During every media interview regarding the survey, I was asked about these figures (see these pieces at Forbes and CIO.com). My initial reaction was that some CEOs may be a bit out of touch. Upon further reflection, however, I have decided that this conclusion is unfair in many situations. In fact, it may not be the CEOs that are the problem at all. I believe that in many cases the CEO is being misled.

Is Your CEO Being Misled?

Let me clarify right away that I am not suggesting that there is some vast conspiracy to mislead CEOs. I believe the disconnect comes about from the way that information naturally works its way up the corporate hierarchy.

Imagine a director-level employee being provided a status report with a list of things that are going well and others going not so well across a range of initiatives. When passing the news up to the VP, the director is often going to naturally spin the good as positively as possible and downplay the bad. The director may even skip a bad point or two in the hopes that the situations can be remedied before anyone up the chain needs to worry.

Next, the VP employs some similar cleansing and scrubbing before providing an update to whichever officer he or she reports to. That officer then applies a bit more scrubbing before talking to the CEO. The end result is that the CEO comes away with a more positive picture than is warranted even though nobody intended to be misleading.

This phenomenon certainly isn’t unique to the processes around being a data-driven business. However, an organization can’t be truly data-driven until it is willing to look in an honest, unfiltered, unbiased way at whatever the facts are that data holds, both good and bad. In other words, in a data-driven organization, people should be comfortable providing the unvarnished truth to the CEO and the CEO should expect nothing less.

Being Data-Driven Is All About Objective Facts

There will certainly be instances where an individual’s pride or bonus will be harmed by the facts presented by the data and the analytics derived from that data. Part of being data-driven, however, is to prefer objective, factual assessments over subjective (often political) assessments. If my numbers are bad when reported factually and transparently, at least we all know how bad the numbers are and I know exactly how much I need to improve them. I’d prefer that to someone deciding my numbers are good or bad based on the mood they are in that day.

As your organization continues down the path of being data-driven, consider a survey of how wide the gap is between your CEO, senior management, and the broader employee base when it comes to the use of data and analytics in the organization. If there is a gap, make it a priority for everyone to focus on closing it. After all, the CEO must provide the support needed to fix problems and build on success as the organization progresses down the road to becoming data-driven. This isn’t possible if the CEO is being misled about the current state of the organization.

Author

Bill Franks is Chief Analytics Officer for The International Institute For Analytics (IIA). Franks is also the author of Taming The Big Data Tidal Wave and The Analytics Revolution. His work has spanned clients in a variety of industries for companies ranging in size from Fortune 100 companies to small non-profit organizations. You can learn more at http://www.bill-franks.com.